Aurigny Air Services - Aircraft Acquisitions

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Tuesday 09 July 2013

The Treasury and Resources Department has today confirmed that Aurigny Air Services is finalising proposals to expand operations on its services between Guernsey and London Gatwick Airport. The move follows Flybe's announcement that it will withdraw from the route in March next year.

"Aurigny is already the market leader on the Gatwick route, carrying just under 200,000 passengers last year. However, whilst it does have some current spare capacity, there is no practical way for it to accommodate the 146,000 passengers carried by Flybe in 2012 without expanding its own services.

"Both the Department and the airline recognise the strategic importance of the Gatwick route to the Island. Given the importance of the service to so many sectors of our community and economy, it is essential that there is confidence a good service capable of meeting current demand will be maintained and that passengers can see we are absolutely committed to ensuring this is the case."

Aurigny is currently undertaking an options appraisal that will ensure it can expand its operations and provide sufficient capacity. These options centre around the introduction of larger jet aircraft on existing schedules or the operation of smaller turboprops at increased frequencies or a combination of both. Either option will require the addition of one extra aircraft to the existing Aurigny fleet.

Deputy St Pier continues:

"Once it has finished its options appraisal, Aurigny will be submitting a business case to the Department for the acquisition of an additional aircraft. The business case will recommend whether the aircraft should be purchased or leased and whether a jet or turboprop option would be best. Key factors will include costs and investment returns, availability of a suitable aircraft within the necessary timeframe and availability of slots at Gatwick Airport. We expect this process to be completed within the next few weeks.

"Any aircraft purchase would have to be funded by Aurigny borrowing either from the States General Investment Pool or commercially from a third party, with appropriate guarantees in place from the States. The Department cannot provide such a guarantee or loan money to the airline without the approval of the States. With the support of the Policy Council, we are therefore taking the opportunity to seek this authority from the States at its July meeting, subject to the Department then considering and approving a detailed business case. The lead-in time for the delivery of aircraft can be several months, so it is important that, once the business case is finalised, Aurigny can move quickly to acquire the aircraft that will be needed to maintain the route."

It is also possible that, if the airline's recommendation is to lease aircraft, the States may be required to guarantee any such lease. The proposals being submitted by the Department at the July States meeting also seeks the authority for this as an alternative option.